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/raid1/www/Hosts/bankrupt/TCREUR_Public/020617.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Monday, June 17, 2002, Vol. 3, No. 118 Headlines ********* * B E L G I U M * LERNOUT & HAUSPIE: Right to File Rescue Plan Expires Today * F R A N C E * ALCATEL: Optronics' Redeployment Plan Cuts 25% of Workforce ALCATEL: Mulls Over Reconversion of Two French Production Units FRANCE TELECOM: Faces EUR450 MM Off-balance Sheet Charge * G E R M A N Y * AHAG WERTPAPIERHANDELSBANK: Paper Says Bank Nears Bankruptcy KIRCHPAYTV GMBH: Premiere Must Find Strong Investor by September MOBILCOM AG: Chief Opts for Arbitration, But FT Says 'Too Late' STP ELEKTRONISCHE: Workers Want Pay Cut Instead of Redundancy * I T A L Y * FIAT SPA: GM Negotiating to Acquire Fiat's Credit Arm Fidis * N E T H E R L A N D S * KPN NV: RAM Mobile Data Acquires Company From KPN Mobile KPNQWEST NV: 40 Bidders Tabled Offer Last Week, Says Paper KPNQWEST NV: Shareholders Probe KPNQwest for Possible Lawsuit LAURUS NV: Retail Group Inks Credit Facility Agreement With Banks LAURUS NV: Restructuring Retail Group States Outlook for 2002 METROMEDIA FIBER: To Reorganize Via Voluntary Chapter 11 Filing METROMEDIA FIBER: Defers Interest Payment on Senior Notes METROMEDIA FIBER: Data Carrier Confirms SEC Investigation * S P A I N * AVANZIT SA: Andersen Confirms Breach of Banking Covenants JAZZTEL PLC: Agrees With Committee on Re-capitalization Plan REPSOL YPF: Divests 50% Stake in Oilfield to Improve Finances * U N I T E D K I N G D O M * BRITISH FEDERAL: Industrial Group Will Be Sold as Going Concern COLT TELECOM: Shakes up Senior Management LASTMINUTE.COM PLC: Buys Destination Holdings for GBP 12 MM LUXURY LIFESTYLES: Administrators Sell Business and Assets MARSHALL BUS: Administrators Put Bus Manufacturing Co. for Sale OCTOPUS MARINE: Receivers Sell Marine Surveying Business RAILTRACK PLC: Deal Between Network Rail, Parent Seen This Week TELECITY: Secures Huge Contracts for Two facilities in Amsterdam TELEWEST COMMUNICATIONS: Annual General Meeting Statement WILLIAM TATHAM: Receivers Offer Textile Machinery Co. for Sale ============= B E L G I U M ============= LERNOUT & HAUSPIE: Right to File Rescue Plan Expires Today ---------------------------------------------------------- Lernout & Hauspie Speech Products NV, the bankrupt vocal technology specialist, who has the sole right to file a reorganization plan would expires today. L&H is asking a bankruptcy court to block third parties from filing competing reorganization plans in its Chapter 11 case through Aug. 1, the Dow Jones newswires reports. If not extended, L&H's right to file a rescue plan will need an extension to be able to complete discussions with creditors, the group stated in a filing this week with the U.S. Bankruptcy Court in Wilmington, Delaware, USA. Meanwhile, the speech and language software group will delay the filing of its plan until after matters in its liquidation proceeding in Belgium are resolved. L&H said the outcome of the matters, which were not described, could affect the terms of the Chapter 11 plan it files in the U.S., the report adds. U.S. Bankruptcy Judge Judith H. Wizmur will preside over the hearing on L&H's extension request scheduled on June 25. =========== F R A N C E =========== ALCATEL: Optronics' Redeployment Plan Cuts 25% of Workforce ----------------------------------------------------------- Alcatel Optronics announced early this month an Industrial Redeployment Plan which will affect all of its manufacturing sites. The plan, which should be completed before the end of the year, calls for a 25% headcount reduction (from 1,805 people at end March 2002 to approximately 1,350 at end 2002). Based on a preliminary analysis, one-time charges of approximately EUR 60 million, related to the plan, will be recorded in the second quarter. In addition, in Lannion Alcatel Optronics will propose to local unions to conduct jointly a study to explore the reconversion of the production unit by seeking external industrial workloads with one or more partners. "We are implementing the Industrial Redeployment Plan in order to further adjust to the persistent market downturn," said Jean- Christophe Giroux, CEO. "An action plan was already initiated as early as a year ago and has already yielded significant results in terms of headcount reduction, inventory control, CAPEX freeze and cost-cutting. We are now accelerating our efforts and strengthening our actions to better adjust our cost structure to current conditions and expect all of these cost savings to be effective in the fourth quarter of this year." The Industrial Redeployment Plan includes the following: - In France, the Optical Fiber Amplifier (OFA)/Optical Interface Subsystem (OIF) assembly, currently based in Illkirch, will be transferred back to Alcatel Optronics' primary facility for active components in Nozay. The reasons for which Alcatel Optronics decided one year ago to expand in Alcatel's Illkirch site are no longer valid, due to the steep market downturn. - In Nozay, as well as in Lannion, Alcatel Optronics will continue to adapt to market conditions by utilizing part-time employment, early retirement and prolonged leaves in order to reduce headcount. - In Canada, the Fiber Bragg Grating (FBG) manufacturing, currently based in Gatineau (Quebec) will be closed and the manufacturing activities transferred to Alcatel Optronics UK, based in Livingston, Scotland. Alcatel Optronics will retain its R&D activities along with a commercial presence in Canada. The activity will be housed at Alcatel's Canadian facility, based in Kanata (Ontario). - In the U.S., the Plano, Texas site will be adjusted according to the depressed market conditions through a reduction in headcount. The site will continue to specialize in board assembly. - In the Netherlands, Alcatel Optronics intends to dispose of its MEMs and Planar design software activities, through a Management Buy Out, expected to close at the end of June. That MEMs business is non-telecom and therefore not considered core to Alcatel Optronics. The Planar design team will be exclusive to Alcatel Optronics for a minimum of one year. - In the Livingston, Scotland site, the industrial space will be rationalized to incorporate the FBG manufacturing activities while continuing production of the passive Planar Lightwave Circuit (PLC) product lines. Consolidating the two passive terrestrial manufacturing activities in one location should result in economies of scale as well as improved technical synergies. Unrelated to this move, some support functions will be further reduced at this site. Alcatel Optronics designs, manufactures and sells high performance optical components, modules and integrated sub- systems for use in terrestrial and submarine optical telecommunications networks. Operating state-of-the-art manufacturing plants in North America and Europe, Alcatel Optronics is a leading supplier of DWDM lasers, photodetectors, optical amplifiers, high-speed interface modules and key passive devices such as arrayed waveguide multiplexers and Fiber Bragg Grating filters. It also has experience in integrating active and passive components and modules into sub-systems. The Optronics Division is part of Alcatel's Optics Group which comprises Alcatel's world-leading activities in optical networking, including submarine and terrestrial transmission systems, fiber optics and optical components. ALCATEL: Mulls Over Reconversion of Two French Production Units --------------------------------------------------------------- The anticipated impact of the worldwide Alcatel Optronics' Industrial Redeployment Plan, introduced to adapt to persistent unfavorable market conditions for opto-electronic components, was discussed with concerned local French unions on June 5, 2002. It was explained that the expected market activity would no longer appear to require the originally forecast production capacity of optical components at the Group's Illkirch facility. As a result, the industrial reconversion of the site that was planned and started in April 2001 will be discontinued. The reconversion had been designed to progressively replace freed production capacity from the discontinuance of GSM handset with opto-electronic component production, the demand for which at the time was growing strongly but which has since seriously dropped off. The Optronics activity at Illkirch will therefore be progressively stopped and transferred to the Group's site at Nozay by the end of 2002. Alcatel is proposing to local unions to negotiate a reconversion plan that would safeguard jobs at the Illkirch site which would eventually no longer be part of the Group. The production activity at Illkirch involves some 780 employees out the total 1600 Alcatel employees there. GSM handset production will continue at the site for a limited time. A reconversion plan is also under study for the 320 Alcatel Optronics employees at Lannion where total Alcatel staff numbers 2000. Alcatel will propose to local unions to conduct jointly a study to explore the reconversion of the production unit by seeking external industrial workloads with one or more partners. Meanwhile, Alcatel will continue to adapt to market conditions utilizing part-time employment, early retirement and prolonged leaves. Alcatel -- http://www.alcatel.com-- designs, develops and builds innovative and competitive communications networks, enabling carriers, service providers and enterprises to deliver any type of content, such as voice, data and multimedia, to any type of consumer, anywhere in the world. Relying on its leading and comprehensive products and solutions portfolio, stretching from end-to-end optical infrastructures, fixed and mobile networks to broadband access, Alcatel's customers can focus on optimizing their service offerings and revenue streams. With sales of EURO 25 billion in 2001 and 99,000 employees, Alcatel operates in more than 130 countries. FRANCE TELECOM: Faces EUR450 MM Off-balance Sheet Charge -------------------------------------------------------- An HSBC research note urged public holders of France Telecom shares to sell the stocks if valued above EUR18, instead of the previous recommendation of EUR23.5, says Total Telecom. The move was triggered partly by the discovery that the French phone giant will face between EUR400 million and EUR500 million in off-balance sheet liabilities due to the sale of shares in telecoms tower operator Crown Castle International. The other reason is the increasing likelihood that it will takeover German mobile phone affiliate via a deal with bankers that will dilute the shareholding in the group. "It will be somewhere between EUR400 and EUR500 million, EUR450 million is a safe guess, probably depending on the average share price in June. But this will come in July and we have already taken provisions for it," a France Telecom spokeswoman told Total Telecom. Two years ago, the group was forced to sell Crown Castle on competition grounds, following its investment in now-bankrupt UK cable operator NTL, the report says. "It sold part of its stake on the market in June 2000 and sold 17.7 million shares to an anonymous financial institution for US$28.5 per share in July 2000, pledging to stump up the difference between that and the share price in June 2002," Total Telecom says. Currently, Crown Castle shares are trading at around US$4, the report says. The company recently posted a sharply wider first- quarter net loss after abandoning some of its partly constructed towers and restructuring its British operations. France Telecom identified this liability in its 2001 annual report, but did not highlight it in a debt reduction plan presented to investors in March, says the industry paper. The company only said it is part of its EUR17 billion in off-balance sheet liabilities up to 2005. ============= G E R M A N Y ============= AHAG WERTPAPIERHANDELSBANK: Paper Says Bank Nears Bankruptcy ------------------------------------------------------------ German securities bank Ahag Wertpapierhandelsbank will soon file for insolvency on orders from the country's financial services authority BAFin, says Borsen-Zeitung. The bank had warned in April that it could slide into a deeper financial crisis due to several legal actions instituted by those opposed to a capital increase at the bank. Citing Frankfurter Allgemeine Zeitung, Troubled Company Reporter- Europe identified in its April 25 issue the Cobra group, which also figured in a similar incident at Commerzbank, as among those that have pending lawsuits against the bank. At an extraordinary general meeting in March, the bank unanimously received approval for its restructuring and capital measures, but this was held up by a shareholder group, presumably Cobra, Borsen-Zeitung said. At the time, Austrian group Aktieninvestor.com had planned to inject money into the bank, but later on dropped the plan following the hitch with the shareholders group. KIRCHPAYTV GMBH: Premiere Must Find Strong Investor by September ---------------------------------------------------------------- The EUR100 million capital infusion by Bayerische Landesbank and HypoVereinsbank into Premiere will only last the pay-TV network until September, thus it must look for a strong partner by then. In an interview with Handelsblatt late last week, KirchPayTV insolvency administrator Josef Fuchsl revealed that talks with possible investors have reached advanced stages, hence worries about not finding any are misplaced. Unconfirmed accounts have it that media mogul Rupert Murdoch and his British pay-TV channel BskyB, which already holds a stake in Premiere, and German media giant Bertelsmann are among those bidding for Premiere. An investment by Hollywood studios is also considered a possibility, Handelsblatt says. Under its recovery plan, Premiere should sign a letter of intent with an investor by the end of September. In addition, the cash injection from the banks will only be undertaken if the company secures the broadcasting rights to Germany's Bundesliga soccer league and reaches a deal with the Hollywood studios over its film rights liabilities. "One can assume that these agreements can be reached by the start of next week," Mr. Fuchsl assures Handelsblatt. DFL German soccer league and Premiere are expected to conclude this week talks over the broadcasting rights for next season. It is understood that Premiere dangled EUR150 million for the rights. The report says soccer clubs have demanded securities for this sum, but this will not be a problem for Premiere, according to company insiders. Since Bawag, an Austrian subsidiary, has backed out from the refinancing commitment, Bayerische Landesbank will secure two thirds of the EUR100 million cash injection, while HypoVereinsbank will take charge of the balance, the report adds. MOBILCOM AG: Chief Opts for Arbitration, But FT Says 'Too Late' --------------------------------------------------------------- Beleaguered CEO Gerhard Schmid has resorted to arbitration to settle its long-running row with France Telecom, particularly the condition under which he will step down, says Handelsblatt. According to the German daily, the arbitration proceeding is expected to settle how much should the French group pay for the 40% stake controlled by the chief. A company spokesman, however, declined to give official details of the proceeding. France Telecom, which last week revoked its partnership agreement with the German mobile phone affiliate, said the move "came too late." France Telecom CFO Jean-Louis Vinciguerra said in a French radio interview that the termination of partnership ties could not be reversed and his company would not try to retain its foothold in Germany at any price. The question now is whether arbitration will ease the pressure on MobilCom, which is facing a deadline at the end of July to have its EUR4.7 billion debt refinanced, Handelsblatt says. Meanwhile, the paper says Mr. Schmid now appears vulnerable and might be ousted at the next supervisory-board meeting this Friday. France Telecom had tried twice, but failed to have the founder and CEO removed during the last two meetings, leading it to cut ties with the German firm Tuesday last week. "According to the co-determination agreement, the supervisory board can vote him out with a simple majority," MobilCom's work- council Chairman Christian Teufel told Handelsblatt. STP ELEKTRONISCHE: Workers Want Pay Cut Instead of Redundancy ------------------------------------------------------------- Employees of German circuit board manufacturer STP Elektronische Systeme are willing to take a 20% pay-cut to keep the company going until it finds new investors, says Frankfurter Allgemeine Zeitung. The works council has reportedly told management to go ahead with its plans to cut wages to minimize, if not avoid redundancies. The company's insolvency administrator, who the German daily failed to identify, estimates that the company must achieve turnover of between EUR90 million and EUR100 million to break even. The company, however, is expected to only reach EUR65 million this year, compared with EUR72 million last year. "Until a deal is concluded, liquidity will be secured by the income of EUR9.1 million from the sale of a parking space," says the German paper. ========= I T A L Y ========= FIAT SPA: GM Negotiating to Acquire Fiat's Credit Arm Fidis ----------------------------------------------------------- General Motors, the world's largest carmaker, is currently in talks with Fiat Group to acquire a controlling stake in the Fidis, Fiat's automotive financing arm. A report on the Financial Times said that GM's plan to gain 51% stake in Fidis will be a deal that would threaten an existing rival offer from three Italian banks including Banca di Roma, Intesa BCI and SanPaolo. Fiat had intended to divest 51 % of Fidis to the three banks, which would raise an estimated EUR 1 billion -EUR1.3 billion (US$940 million-US$1.2 million) and remove EUR8 billion of loans and financing from its balance sheet. However, under the terms of the alliance between GM and Fiat, GM has the option to buy a stake in Fidis or any other Fiat Auto asset. GM, which paid US$2.4 billion for 20 % stake in Fiat Auto two years ago, confirmed Thursday it was discussing with Fidis but declined to release details, the report adds. Fiat has an option to sell the remaining 80 % of Fiat Auto to GM from 2004-09 in a "credit co-operative agreement" to pool back- office functions between Fidis and GMAC. The master agreement between GM and Fiat makes clear that the option cannot be brought forward without re-negotiation. ===================== N E T H E R L A N D S ===================== KPN NV: RAM Mobile Data Acquires Company From KPN Mobile -------------------------------------------------------- The management of RAM Mobile Data (Netherlands) B.V. - Joachim Kaarsgaren and Dirk Fabels - will take over all 100% shares in the company from KPN Mobile, the company said in a statement Thursday. KPN Mobile has owned RAM Mobile Data since spring 2000. The acquisition will allow RAM Mobile Data to operate independent of network technology and telecom operators. RAM Mobile Data will become a completely independent Dutch provider of mobile data communication solutions. The company will keep in place its present course and strategy. Its organization will not change as a result of the acquisition. KPN Mobile and RAM Mobile Data are currently holding talks with the aim of enabling RAM Mobile Data to market GPRS services in the near future. RAM Mobile Data will continue to play an operational role in ACE, the GPRS application and development centre of KPN Mobile. Similarly, RAM Mobile Data will continue to perform maintenance of the Belgian Mobitex network of BASE. Kaarsgaren and Fabels have considerable confidence in the future of the company. They said: "This acquisition gives us the possibility to build on the course we have adopted and on our strategy of being independent of technology and operators. Thanks to this independent position, we will be able to give our customers even better full and impartial advice, regardless of whether the advice concerns Mobitex, GPRS or, in the future, UMTS. RAM Mobile Data excels especially in delivering professional services that give us such a unique position in the market for mobile business-critical applications." The Mobitex network, which RAM Mobile Data manages, will remain a major cornerstone of the company. KPN Mobile N.V. is a leading European mobile telecommunications network operator and provider of mobile voice and data services. KPN Mobile is currently active with its own network operators in Germany (E-Plus), Belgium (BASE) and the Netherlands (KPN Mobile), where more than 7400 employees serve some 13.6 million customers (May 2002). KPN Mobile N.V. is an 85%-owned subsidiary of Koninklijke KPN N.V. NTT DoCoMo, Inc. owns the remaining 15%. RAM Mobile Data headquartered at Maarssen is a completely independent specialist provider of products and services for wireless and mobile data communication in the Netherlands. In addition to an extensive range of services, the company provides from its network-independent position an array of solutions built on GPRS, Mobitex and in due course UMTS. KPNQWEST NV: 40 Bidders Tabled Offer Last Week, Says Paper ---------------------------------------------------------- Several bidders from across Europe and the other side of the Atlantic were expected to table an offer for the entire or bits and pieces of KPNQwest, which closed the bidding Thursday, says Total Telecom. Trustees of the bankrupt data carrier have yet to reveal the identities of the bidders, but a source told the industry paper that they include Britain's Colt and Cable & Wireless, Deutsche Telekom, Belgacom and U.S. giant AT&T. In addition, KPNQwest's largest client and key shareholder, Dutch KPN, has also expressed some interest; so does U.S. Qwest Communications, the firm's other major shareholder. "The appetite for KPNQwest assets is strong, considering the current environment. More than 40 groups have expressed interest and they have until the end of today to present official bids," the source told the paper last Thursday. "The trustees have decided that parties bidding for the entire network will have top priority," he added. But analysts interviewed by Total Telecom say the company will have a hard time finding a buyer for the entire network because most telecom operators are only interested in plugging holes in their networks. Meanwhile, a Lehman Brothers spokeswoman confirmed on Thursday that it is backing a private equity fund, which is part of a consortium eyeing KPNQwest's self-sustaining central European network. The Total Telecom source also said that a deal with this consortium is close. Talks could be wrapped up as early as this week. Irish operator eTel is the other bidder that has expressed interest in this asset, says the paper. Trustees of the company have said that it must close an asset sale within this month to continue running its network, Europe's most expansive data carrier system. It accounts for as much as half of the Internet traffic in the continent. KPNQWEST NV: Shareholders Probe KPNQwest for Possible Lawsuit ------------------------------------------------------------- Some shareholders of bankrupt company KPNQwest are contemplating on reasons to possibly sue the company or its parents KPN NV and Qwest Communications International Inc., in an attempt to retrieve their money, papers reported. Reports said that any legal action taken is expected to happen in Netherlands. The complaints will primarily be based on whether the parent companies breached their supply contracts with KPNQwest and whether they tried to protect the rights of minority shareholders who control 12% of the company. No one has yet filed a suit against KPNQwest or its parents. However, there have been shareholders who have expressed their ire and have encouraged shareholders to band together to pursue the probe, papers added. In addition, some bondholders are taking a closer look at bank loans given in KPNQwest's final months. Also, some of KPNQwest's managers, who declared a profit warning shortly after inferring strong sales growth, will not be exempted from scrutiny. In the hopes of reclaiming their money, the bondholders have signified their desire to carry out negotiations with the KPNQwest administrators. Along with by London law firm Cadwalader, Wickersham & Taft, the bondholders who own 25% of outstanding bonds have formed a committee to consider this option before contemplating legal action. A possible lawsuit will cause more problems for KPNQwest's parents KPN and Qwest who have been experiencing problems of their own, making it a hard to disentangle themselves from the bankrupt company, reports said. LAURUS NV: Retail Group Inks Credit Facility Agreement With Banks ----------------------------------------------------------------- Following the press release of June 4, 2002, Casino and Laurus announced Thursday that the Credit Facility Agreement with the Banks (ABN AMRO Bank, ING Bank and Rabobank Nederland) has been signed. This agreement comprises a maximum total facility of ? 950 million, as disclosed previously in the press releases of March 7, 2002 and April 29, 2002. Furthermore today agreement was reached on the Excess Liability Facility of EUR 250 million, non- recourse to Laurus NV, for Spain and Belgium. Now that the agreements with Casino and the Banks have been signed, the annual general meeting of shareholders of Laurus will be convoked today also. This meeting will be held on June 28, 2002 at the Netherlands Congress Centre, Churchillplein 10, The Hague. On the agenda of this meeting are, among others, the proposed transaction between Casino, Laurus and the Banks and the annual accounts 2001. LAURUS NV: Restructuring Retail Group States Outlook for 2002 ------------------------------------------------------------- In the first four periods of the current year the total sales of the Dutch formats (Konmar, Super De Boer and Edah) decreased slightly with 2%, partly due to the sale of a number of stores (52). On a like-for-like basis sales grew with almost 3%. Super De Boer's sales growth on a like-for-like basis was at just over 10% better than the 6.5% recorded by the market as a whole over the same period. Edah (1% sales growth) and especially Konmar (5% sales decrease) fell short of the market average. Sales in Spain and Belgium decreased compared with 2001, due to the closure of a number of stores (mainly in Spain). The sales decrease on a like-for-like basis was in Spain 11% and in Belgium 3%. The consolidated sales of Laurus NV were EUR 1,696 million (2001: EUR1,859 million) and therefore felt short with 9% compared with last year. If the divested business units (among others Spar) are not taken into consideration the consolidated sales decreased with over 6%. The combined operating income for all the Dutch operations was positive in the first four periods of 2002, due mainly to Super De Boer and Edah. Konmar's operating income remained negative. The operating income for Laurus as a whole was a break-even result, despite the negative results in Spain and Belgium. Reflecting the relatively high financing charges, the consolidated net income was negative. The speed of recovery of the Dutch supermarket formats will depend on the progress made with commercial and operational improvements in such areas as format management, cost control, productivity, leakage reduction and information systems. In Spain and Belgium, except for current profitability improvement programs, problems are being resolved structurally with high priority. Since many of these measures will involve additional cost and capital expenditure in the initial stages, for which the funds are not at present available, a start cannot be made until the recapitalization exercise has been completed. The group forsees a further decrease in staffing levels in the current year. Until the financial position has been strengthened, only essential capital expenditure will be undertaken. Sales development for the first four periods of 2002 versus the first four periods of 2001 2002 2001 ------------------------------------------------ (x euro 1 million) sales stores sales stores The Netherlands Konmar* 371 140 381 131 Super De Boer 544 414 540 440 Edah 368 275 393 310 ____ ____ ____ ____ 1.283 829 1.314 881 Spain** 184 665 212 733 Belgium** 144 435 153 475 * Restated to facilitate comparison (including Groenwoudt/Nieuwe Weme and Lekker & Laag). ** Sales figures for the first three months. METROMEDIA FIBER: To Reorganize Via Voluntary Chapter 11 Filing --------------------------------------------------------------- Metromedia Fiber Network, Inc. (MFN) announced in a statement late in May that it and most of its domestic subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. The Company will continue to operate without interruption. In conjunction with the filing, MFN has reached an agreement with its senior secured lenders which will enable the Company to fund its operations while it implements its plan to become cash flow positive. The plan includes significant cost reductions through a substantial deleveraging of the Company's balance sheet, the disposal of non-productive properties (including idle data centers or non-essential offices), rejection of burdensome vendor contracts and reduction of personnel. By shedding expenses and focusing on the Company's highest margin operations, MFN expects to quickly stabilize its financial status. "First and foremost, I want to assure our customers that our top- notch service levels will not be compromised by the reorganization process," said John Gerdelman, president and chief executive officer of Metromedia Fiber Network. "Dedication to our customers and their businesses continues as a top priority." "We believe that our core metro-fiber and data center businesses are some of the best assets in the telecommunications industry. However, in growing the business we, along with others in the industry, out-paced the demand and, as a result, are overbuilt. We are committed to taking the painful but necessary steps to ensure stability and long term success for our company. Our objective is to move through Chapter 11 expeditiously and have the "New MFN" emerge with a sound capital structure and operational base, fully positioned to take advantage of market opportunities." Metromedia Fiber Network Government Services, Inc. was not one the subsidiaries included in this filing and will continue to operate outside of the Chapter 11 proceeding. MFN also announced that it has hired Impala Partners to assist in the restructuring and UBS Warburg to advise on strategic alternatives. Finally, following the group's bankruptcy filing, the Company's securities have been delisted from The Nasdaq Stock Market on May 20, 2002. METROMEDIA FIBER: Defers Interest Payment on Senior Notes --------------------------------------------------------- Metromedia Fiber Network, Inc.-- www.mfn.com -- announced May 15 that it did not pay approximately US$32 million of interest due May 15, 2002 on its US$650 million 10% Senior Notes. If MFN does not make the interest payment on or before the expiration of a 30-day grace period an "event of default" under the indenture governing these notes will occur. The Company also announced that its quarterly report on Form 10-Q for the quarter ended March 31, 2002 has not been filed and will be delayed. MFN previously announced that it had delayed the filing of its Annual Report on Form 10-K for the year ended December 31, 2001 with the Securities and Exchange Commission. The Company has not yet filed its Form 10-K. MFN is provider of digital communications infrastructure solutions. The Company combines the most extensive metropolitan area fiber network with a global optical IP network, state-of- the-art data centers, award-winning managed services and extensive peering relationships to deliver fully integrated, outsourced communications solutions to Global 2000 companies. Contact Information: USA: Martin Cohen Investor Relations Metromedia Fiber Network Telephone: 212-606-4389/212-803-5596 Email: kcarbone@mfn.com European Headquarters: Metromedia Fiber Network Inc. Star Parc Boeing Avenue 271 1119 PD Schiphol-Rijk The Netherlands Telephone: +31 (0) 20 750 6500 Fax: +31 (0) 20 750 6550 METROMEDIA FIBER: Data Carrier Confirms SEC Investigation --------------------------------------------------------- Metromedia Fiber Network, Inc.-- www.mfn.com -- announced Thursay, June 13, that it had been advised that the staff of the Securities and Exchange Commission has commenced a formal investigation into the company's past accounting practices that led to the previously announced expected restatement of the company's operating results for each of the quarterly periods included in the fiscal year ended December 31, 2001. As previously announced, the expected restatements involve revenue/sales credit recognition, timing of expense recognition and non-cash lease accounting and purchase accounting issues. The company has cooperated fully with the SEC in the investigation, and will continue to do so. Contact Information: Marty Cohen Investor Relations Metromedia Fiber Network, Inc Telephone: 212-606-4389 Email: kara.carbone@mfn.com ========= S P A I N ========= AVANZIT SA: Andersen Confirms Breach of Banking Covenants --------------------------------------------------------- The auditor of troubled technological group Avanzit SA admitted last week that the company failed to meet financial ratios demanded by a banking syndicate that dangled three separate loans. Arthur Andersen said the ratios were related to turnover and debt levels, which the company failed to maintain. The banking syndicate led by Santander Central Hispano has already called for the cancellation of the EUR108 million worth of loans on this ground, says the El Pais/FT Information. The other members of the syndicate are Caja de Segovia and German bank HypoVereinsbank. In its latest profitability analysis on the company, Wright Investor's Service noted that the profit margin of the company has gone down below the level achieved in 2000, when the company gained 7.1% on sales. In 2001, earnings before extraordinary items were at (negative) - EUR52.85 million, or -11.5% on sales. "The company's return on equity in 2001 was -18.1%. This was significantly worse than the already high 60.8% return the company achieved in 2000," Wright said. For the 52 weeks ending May 24, 2002, the company's stock shed a total of 74% to EUR3.29, losing 47.1% during the last 13 weeks. The company has not paid dividends the last six fiscal years. The company currently employs 3,611, with sales of EUR459.60 million (US$426.71 million). It has operations in Portugal, Morocco, Mexico, Guatemala, El Salvador, Argentina, Chile, Peru, Brazil and Jamaica. The company's market capitalization is EUR102.15 million (US$94.84 million). The capitalization of the floating stock (i.e., that which is not closely held) is EUR53.05 million (US$49.25 million), Wright said. JAZZTEL PLC: Agrees With Committee on Re-capitalization Plan ------------------------------------------------------------ Jazztel plc -- www.jazztel.com -- announced on June 13 that it has reached an agreement in principle with an ad-hoc committee of holders of its Senior Notes regarding the terms of a recapitalization plan. This non-binding agreement is conditioned on delivery of definitive documentation. Under the recapitalization, Jazztel's outstanding EUR 676 million of Senior Notes would be exchanged for ordinary shares representing 88% of Jazztel's ordinary share capital and EUR 75 million of new convertible notes (the "Convertible Bonds"). In addition, the Company would return the cash held in certain interest escrow accounts to holders whose Senior Notes are secured by such funds. After the recapitalization, the existing equity holders would be diluted to 12% of the ordinary share capital. The Convertible Bonds will mature in 2012, will bear interest at 5% per annum, payable at the Company's option in cash or in kind and would be convertible into 17.5% of the Company's share capital after recapitalization. Subject to prevailing market conditions, the Company would consider implementing a rights issue after the completion of the recapitalization. The Board of Directors of Jazztel Plc has approved the terms of this transaction, which would eliminate all of the Company's EUR 676 million of outstanding Senior Notes and would significantly reduce its interest expense. Martin Varsavsky, the Company's principal shareholder, strongly supports the proposed restructuring and will vote in favor of the necessary shareholders' resolutions. The recapitalization is expected to close by 30th of September 2002 and must be approved by (i) the Company's shareholders and (ii) the holders of at least 75% of the Senior Notes who vote on the proposal and a majority in number of holders voting. This would be implemented through a scheme of arrangement under section 425 of the UK Companies Act 1985. The recapitalization would also be subject to satisfactory renegotiation of the existing credit facility and backbone leases, and other customary conditions. The recapitalization would involve exclusively Jazztel p.l.c., which is the U.K. holding company. None of the operating subsidiaries of Jazztel in Spain and Portugal would be involved in the recapitalization. Trade creditors and other vendors to Jazztel p.l.c and to the operating subsidiaries would be unimpaired and unaffected by the recapitalization. Commenting on the agreement in principle reached with the Committee, Antonio Carro, Jazztel's Chief Executive Officer said: "We are very pleased to reach this agreement with the bondholders committee. Once completed, it will substantially eliminate our long term debt. Our customers, suppliers, partners and employees would all greatly benefit from this recapitalization and I would like to thank all of them for their continued support in these challenging times. By restructuring our high yield debt, we would save over Euro 93 million of yearly cash interest payments. We, however, currently do not anticipate to give new guidance to the market until the recapitalization process is concluded." Goldman Sachs International and JPMorgan Chase are acting as financial advisors to the Company on the Recapitalization. Chadbourne & Parke, Linklaters and Uria y Menendez are acting as legal counsel to the Company. Rothschild is acting as financial advisor to the Committee. Cadwalader Wickersham & Taft and Cuatrecasas are acting as legal counsel to the Committee. The Company recommends that Holders of Senior Notes wishing to obtain additional information regarding the terms of the recapitalization contact bondholder's counsels Cadwalader Wickersham & Taft on +44 207 170 8700 (attention of Andrew Wilkinson and Stephen Phillips)and Rothschild on +44 207 280 5000 (attention of Bernard Douton). Contact Information: Investor Relations Telephone: 34 91 291 7200 Email: Jazztel.IR@jazztel.com REPSOL YPF: Divests 50% Stake in Oilfield to Improve Finances ------------------------------------------------------------- Spanish petrochemical group Repsol YPF is selling its 50% stake in the Ayoluengo oilfield to British group Northern Petroleum and Teredo, reports Expansion. Financial details of the deal have not been disclosed just yet according to the paper, but said that Teredo will increase its stake in the oilfield from 25% to 30%. The divestment is part of the company's plan to counteract the negative impact of Argentina's financial crisis to its balance sheet. The oilfield is located in the province of Burgos, which was the first oilfield to operate in Spain back in 1964. =========================== U N I T E D K I N G D O M =========================== BRITISH FEDERAL: Industrial Group Will Be Sold as Going Concern --------------------------------------------------------------- British Federal Limited, a Welding Systems and Control Technology Business situated in Dudley, West Midlands is in Administrative Receivership. J C Reid/P M Evans, the Joint administrative receivers, offers the business as a going concern. Key features include: Turnover of GBP11 million - Leasehold Property, 4 acres, 100,000 sq ft of factory and office space, situated close to M5 - Extensive range of plant and machinery - Well established customer base - Existing order book Contact Information: J C Reid or P M Evans Deloitte & Touche Lomond House 9 George Square Glasgow G2 1QQ Telephone: 0141 204 2800 Fax: 0141 314 5895 COLT TELECOM: Shakes up Senior Management ------------------------------------------ COLT Telecom Group plc, one of Europe's leading providers of business communication services announced Thursday that James C. Curvey plans to relinquish the Chairmanship of COLT at the end of the year and that Barry Bateman, Vice Chairman of Fidelity International Limited would be his successor as Chairman. Mr Curvey will remain a member of the Board. COLT also said that further to the announcement of March 27 that Lawrence M. Ingeneri planned to step down as a director and Chief Financial Officer, Mr Ingeneri will be leaving COLT at the end of June. Andrew Steward, currently CFO of Fidelity International Limited, will be Acting CFO of COLT until a permanent appointment is made. COLT Chairman Jim Curvey said: "I have been involved with COLT since its beginnings in 1992 and have served as a director since 1996. At the end of this year I will have been Chairman for three years. I believe the time is now right to begin the transition to a new Chairman and I am very pleased that Barry Bateman has accepted the Board's invitation to be COLT's next Chairman. Barry has also been a director of COLT since 1996 and will bring a wealth of business experience to the role of Chairman. "Larry Ingeneri has played a major role in the success of COLT and in March he announced his intention to step down as a director and CFO. Although the search for a new CFO is underway it is likely that it will take some time to find the right candidate. On consideration, Peter and I have concluded that it was unfair to ask Larry to stay on through an extended search period and accordingly Larry plans to leave COLT at the end of June. We have asked Andrew Steward to serve as Acting CFO until a permanent successor is appointed." COLT President and CEO Peter Manning added: "COLT continues to be very successful. A feature of our success over the years has been our ability to transition successfully - whether that be from a small start-up to one of Europe's leading communications services organizations - or whether it be our ability to achieve smooth transitions in management. COLT is more successful today than it has ever been. A big part of that success has been due to the contribution made by Larry Ingeneri. His prudent stewardship of our finances has given COLT one of the strongest balance sheets in this industry, a very powerful competitive advantage in today's market place. I wish him well for the future. I also take this opportunity to thank Jim Curvey for all his support and look forward to continuing to work with Barry in his new role as Chairman." COLT Telecom Group plc is a provider business communication services through high bandwidth local networks in 32 European cities in thirteen countries supported by a series of Internet Solution centers. COLT Telecom Group plc is listed on the London Stock Exchange (CTM.L) and Nasdaq (COLT). Information about COLT and its products and services can be found on the web at www.colt.net Contact Information: John Doherty Investor Relations Director Telephone: +44 20 7390 3681 LASTMINUTE.COM PLC: Buys Destination Holdings for GBP 12 MM ----------------------------------------------------------- lastminute.com plc announced on Thursday, June 13, 2001, the purchase of The Destination Holdings Group Limited (DGL), a leading online travel provider of flights, own label package holidays and car hire for GBP12.0 million. The consideration will be satisfied by a vendor placing to raise GBP8.0 million and the issue of 4,835,298 new shares in lastminute.com plc. Highlights of the transaction: - significant earnings enhancing in the first full year after acquisition - immediate positive contribution to operating cashflow. At April 30, 2002 DGL's net cash and investments amounted to GBP8.2 million - creates the opportunity for further cost synergies supplementing the recent Travelselect acquisition and growth in gross margins - strengthens the lastminute.com product portfolio by providing tailor-made holiday solutions for clients for both long-haul destinations and city breaks - cements the relationships with key airline and hotel suppliers. DGL has over 16 years experience in providing travel solutions for clients. Sales are generated both on and off-line. The proportion of bookings now generated online is approximately 75% of total bookings. The Group trades under the travel4less brand online, with twenty four individually branded sites for each travel product or destination. DGL has seen sales grow from GBP8.1 million in the year to April 30, 1995 to GBP28.3 million in the year to April 30, 2001. Audited profit before tax (after adjusting for directors bonuses and other non trading items) in the year to April 30, 2001 was GBP1.1 million. The latest unaudited management accounts for DGL for the year to April 30, 2002 show revenues of GBP38.8 million generating a gross margin in excess of 15% and a profit before taxation of GBP1.4 million on the same basis. Unaudited net assets at April 30, 2002 amounted to GBP0.5 million (2001 audited: GBP0.4 million), including net cash and investments of GBP8.2 million. DGL currently employs 119 full time staff based in London. Raj Kumar, the joint majority shareholder and Group Managing Director of DGL will join the Executive Committee of lastminute.com with effect from completion. In addition to the initial consideration, lastminute.com will pay a maximum deferred amount of GBP3 million, dependent upon the results of DGL for the year ending April 30, 2003. The deferred consideration may be satisfied either in new shares or cash, at the option of lastminute.com. The 4,835,298 new shares in lastminute.com plc to be issued as initial consideration are subject to lock-up provisions for 12 months from completion. lastminute.com continues to trade in line with expectations for the seasonally stronger second half of the financial year. The Group remains confident of continuing business growth and moving further towards overall Group profitability and positive operating cashflow. lastminute.com plc proposes to raise GBP8.0 million, after expenses, by way of a vendor placing of 9,638,555 new lastminute.com plc shares priced at GBP0.83 per share. The new shares will rank pari passu in all respects with the existing shares. Application has been made to the UK Listing Authority and to The London Stock Exchange for all the new shares to be admitted to the Official List and to trading on The London Stock Exchange's market for listed securities (Admission). It is expected that Admission will become effective from 8.00am on June 18, 2002 and dealings will commence at that time. The acquisition and vendor placing are conditional, inter alia, upon Admission occurring by 10.00am on June 21, 2002 (or such later time and/or date as Cazenove and the company may agree). lastminute.com was advised by Cazenove & Co. Ltd in connection with the vendor placing. Allan Leighton, Chairman of lastminute.com said: "The acquisition of The Destination Group provides access to excellent and exclusive high margin product, ideally suited to the lastminute.com customer base." Brent Hoberman, Chief Executive of lastminute.com said: "Raj Kumar and his team have built a great business operating principally in the online travel sector. I am delighted to welcome them to the lastminute.com group and to acquire such an earnings enhancing company which furthers the scale of the UK business." Raj Kumar, Group Managing Director of The Destination Group Limited said: "To become part of such a dynamic and forward thinking Group is tremendously exciting and offers us the economies of scale and global distribution we need to grow the business dramatically and strengthen both brands in an increasingly competitive marketplace. The move towards dynamic packaging will ensure that we become the integrated online tour operator of choice for the discerning client." Contact Information: Brent Hoberman Chief Executive Martha Lane Fox Group Managing Director David Howell Chief Financial Officer Telephone: +44 (0)20 7802 4498 LUXURY LIFESTYLES: Administrators Sell Business and Assets ---------------------------------------------------------- Luxury Lifestyles Limited T/a Chester Barrie, a company engaged in the manufacture and wholesaler of men's and ladies high quality clothing is in Receiverhip. Bill Dawson and Ian Brown, Joint Administrative Receivers, offer for sale the business and assets of the company. Main features of the business includes: - Annual turnover GBP6 million - Intellectual Property including Trademarks, Licences and well known Brand - Skilled workforce - Fully equipped plant For further information, please contact: Michael Hall/Clare Boardman Deloitte & Touche 201 Deansgate Manchester M60 2AT Telephone: 0161 455 8342 Fax: 0161 829 3806 or Chester Barrie Weston Road 201 Deansgate Crewe Cheshire CW1 6BA Telephone: 01270 583161 Fax: 01270 584049 MARSHALL BUS: Administrators Put Bus Manufacturing Co. for Sale -------------------------------------------------------------- Marshall Bus (UK) Limited (In Administration) are manufacturers of buses and also provide refurbishment and accident repair facilities. Ian Carr, the Administrative Receiver, offer for sale the business. Key features include: - Turnover circa GBP8 million per anum - Substantial order book - High quality customer list - Skilled workforce - "Flying M" logo - Potential to move to Bespoke manufacturing unit - Fully transportable jigs, fixtures and tools Contact Information: Ian Carr Grant Thornton Byron House Cambridge Business Park Cowley Road, Cambridge CB4 0WZ Telephone: 01223 225600 Fax: 01223 225619 Email: ian.carr@gtuk.com OCTOPUS MARINE: Receivers Sell Marine Surveying Business -------------------------------------------------------- Octopus Marine Systems Limited (In Administration) The Joint Administrative Receivers, J M Wright and P Finnity offer for sale the following business and assets of Octopus Marine Systems Limited. This is an established business involved in the manufacturer and marketing of marine surveying equipment and marine surveying consultancy. Products - 360 sub-bottom processor/shallow seismic - acquisition system - 460 sidescan acquisition system - 460 P/PX portable sidescan system - 361/461 seismic and sidescan processing software - F180 inertial attitude and positioning system Key features of the business include: - Strong brand profile - Sole UK distributor for an American manufacturer - Worldwide customer base, approximately GBP1.5 million turnover - Highly skilled workforce with technical expertise - Based in Deddington, Oxfordshire - Leasehold premises For further information, please contact: Joanne Wright or Karen Cooper Kroll Buchler Phillips Aspect Court 4 Temple Row Birmingham B2 5HG Telephone: 0121 212 4999 Fax: 0121 212 4944 RAILTRACK PLC: Deal Between Network Rail, Parent Seen This Week --------------------------------------------------------------- Shares of Railtrack Group could start trading at the London Stock Exchange this week, as the company is set to sign an agreement to transfer troubled unit Railtrack Plc to Network Rail, says BBC News. The news channel says as much as 70% of Railtrack Group's shareholders are in favor of selling the train and tracks unit to the government-backed not-for-profit vehicle. This new company is offering to absorb the unit's GBP6.5 billion of debts, on top of a GBP500 million payment to acquire the unit. In addition, this buyer will also pay GBP375 million for one section of the Channel Tunnel Rail Link. It is understood that Railtrack Group is now finalizing the sale of this asset to London & Continental Railways, which will be managed by Network Rail. The report says Network Rail is already in the final stages of its talks with a banking syndicate over a GBP9 billion bridging loan to help finance the acquisition and maintain Railtrack Plc. Of the Railtrack Group's 250,000 shareholders, institutional investors, which accounts for 70%, will vote to accept Network Rail's offer during an extraordinary general meeting before the end of July, the report says. Small investors are expected to reject the offer, as they are intent on filing a damage suit against the government for putting the company under administration. They claim they are not bound by any decision of the majority. Shares of Railtrack Group have been suspended since Railtrack Plc was placed under administration late last year. TELECITY: Secures Huge Contracts for Two facilities in Amsterdam ---------------------------------------------------------------- TeleCity, one of the leading suppliers of Internet data center services in Europe, announced Thursday several new contracts at its two facilities in Amsterdam. The largest group of new customers choosing to host with TeleCity are Internet Services Providers (ISP's) including Xtended Internet, Digital Intelligence, Internet Online and Titan Networks. This trend in the rise in number of ISP customers at TeleCity is expected to continue as the Netherlands' ISP market is predicted to grow on average 20% per year till 2004. In relation to the developments in the ISP market, web hosting has received increased attention in Europe generally and more specifically in the Netherlands. Web hosting is now seen as central to the e-business strategy of many companies and IDC expects the Dutch web hosting market to grow from EUR 36.4 million in 2000 to 210.5 million in 2004. Titan Networks, the leading German web hoster, has chosen TeleCity Amsterdam to provide it with collocation and network services as part of its European expansion plans and entry into the Dutch market. Thomas Wild, CEO of Titan Networks GmbH in Frankfurt explains the motives for choosing TeleCity: "We chose TeleCity after considering all of the collocation providers in Amsterdam in some detail. From a network perspective, the high number of carriers in the facilities and the hosting of AMSIX gives them a great advantage, and one which helps us offer better service to our own customers who are looking to place networks and content increasingly closer together. "In a turbulent market, while many operators are going out of business, TeleCity offers a considerable level of financial security and stability. This stability is mirrored by their technical expertise which, coupled with the quality of their facilities, enabled them to meet our own extremely high technical specifications and requirements." Harry Dijkstra, Director of Internet Online BV says: "We chose TeleCity based on the high quality of service it provides. Previous experiences with other data centre operators have highlighted to us the importance of high standards of service and support. TeleCity offers rapid response and deployment of services and support whenever we make such a request. In addition, TeleCity hosts AMSIX, our national internet exchange point." "For us TeleCity was the right choice, because they host several independent ISPs," continues Paul Wouters, CTO Xtended Internet. "In addition, by hosting AMSIX, TeleCity gives us the guarantee that we will never again have to depend on one ISP for upstream transit to the national peering point. We have learned the hard way that this has become a key requirement to provide support to businesses." TELEWEST COMMUNICATIONS: Annual General Meeting Statement --------------------------------------------------------- Telewest Communications plc -- www.telewest.co.uk -- held its Annual General Meeting in London on June 11. Adam Singer, group chief executive, gave the following update on current trading: "The company continues to perform in line with the trends reported at the time of our first quarter results announcement on May 2. Progress has continued into the second quarter. In particular, the number of installed blueyonder broadband internet subscribers has grown successfully through the quarter to 169,000 as of 10 June, up from 148,000 on May 2." "At the same time, we are continuing with the headcount reduction and organisational changes announced in May, along with continuing efforts to reduce capital expenditure. These moves will help put the company on a sounder financial footing and enable Telewest to operate more efficiently." "While the company continues to deliver good operating performance, we acknowledge the anxieties of shareholders and bondholders in the light of market concerns about our funding. We do have a requirement for vendor financing and we need to fill the outstanding portion of the institutional tranche of our bank facility. Moreover, the ability to draw down our bank facility is dependent upon continuing to deliver strong operational performance. If we are unable to meet any of these requirements then we will potentially face a funding gap. Against this background, as I said in May, the company will continue to explore all options to address its funding requirements to help us leverage our strong operational performance into a more secure financial position." Contact Information: John Murray Director Policy and Communications Telephone: 020 7299 5888 WILLIAM TATHAM: Receivers Offer Textile Machinery Co. for Sale -------------------------------------------------------------- William Tatham Limited (In Administration) The Joint Administrators Derek Oakley and Andrew Redmond of Tenon Recovery offer for sale the business and assets of the above company. Principal features include: - Manufacture of textile machinery - Turnover approximately o5 million - Freehold premises - Skilled workforce For further details, interested parties should contact: Chris Ratten or Jeremy Woodside Tenon Recovery Telephone: 0161 834 3313 Fax: 0161 827 8402 Email: christopher.ratten@tenongroup.com *********** S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Larri-Nil Veloso, Maria Lourdes Reyes, Jean Claire Dy, Editors. Copyright 2002. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. 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